How to Trade Ripple Cryptocurrency

Hello, trader friends!

At the moment, the capitalization of cryptocurrencies is only growing, just like public interest in the market itself. Moreover, this growth is not linear, but truly exponential.

However, there comes a moment when every new cryptocurrency runs into the same problem of self-identification. Against this background, Ripple stands out favorably: not exactly a cryptocurrency, but also far from a familiar settlement system. Today we will find out what it really is, what opportunities Ripple provides to ordinary traders, and consider trading strategies and prospects for trading Ripple (XRPUSD)

Ripple differs from other cryptocurrencies. In fact, it cannot even really be called a currency; a more accurate definition is a protocol for financial transactions. At the same time, the system has its own internal currency, XRP, used mostly for the technical needs of the network. Thus, a symbolic fee is charged for each transaction (almost imperceptible), which, moreover, is immediately burned. That is, the amount of currency in circulation decreases over time, which protects the internal currency from inflation. All XRP were issued in full at the launch of the system. At the same time, the creators kept about half of the total amount of currency for themselves, so to speak, to maintain the interest of the developers.

All settlements in the Ripple network are made on credit. In essence, this is a live implementation of the trusted relationships network concept, and transactions do not occur here in the usual sense of the word. All transactions in the Ripple network are exchanges based on a trust limit for specific network nodes. At the same time, it does not fundamentally matter which currency to use. You can issue any amount of any currency. But in order to exchange this currency, you need to have a trust line with the one with whom you want to make the exchange, and in the required amount. That is, everything is built on trust and limits.

Let us consider an example of a constructed trust line. Suppose Alice wants to exchange 500 units of XRP for $100. Bob wants to make the reverse exchange, but he does not know Alice. At the same time, both Alice and Bob know Carol, and are ready to lend her money up to the designated amounts. As a result, the following chain is built: Alice owes Carol $100, Carol owes Bob $100, Bob owes Carol 500 XRP, and Carol owes Alice 500 XRP. As a result, a mutual exchange is made and now Alice's wallet has $100, while Bob has 500 XRP.

While most cryptocurrencies are aimed at creating a single currency, as a rule without limiting areas of application, Ripple generally changes the idea of the usual settlement system. At the moment, Ripple's main purpose is to rethink international bank transfers. Thanks to high transaction speed and partial decentralization, Ripple simultaneously ensures the quality and security of transfers, generally representing a much more efficient system.

And although everything looks very rosy on paper, implementation into the banking system requires a large amount of effort, and the lack of a serious motivating factor (material) for the banks themselves does not help this. After all, this can become a serious obstacle to the popularization of the new settlement system.

The main reason for the community's concern is the large amount of the network's internal currency in the hands of the developers. It turns out that if anything happens, the founders can manipulate the XRP rate at their own discretion, for example, by deliberately devaluing the currency. From the perspective of an ordinary trader, you must admit, such a situation does not look very bright.

Bitstamp is the main platform for trading XRP. The chart of the currency pair can be found through the TradingView service. To open the chart of the instrument, enter XRPUSD in the symbol field.

During the spring of 2017, the XRPUSD rate rose more than 60 times, but after reaching its peak it lost 50% of its value. At the moment, the price is moving in a channel from 0.1500 to 0.3000. The current dynamics are negative, in the medium term we observe a flat, and the long-term trend is upward.

If you want to make money speculating on the Ripple rate, it is best to do it through a forex broker. This will save you from additional hassle with exchangers, commissions, and other restrictions that you will definitely encounter when trading the currency on an exchange. Right now, the XRP against the dollar pair is already available for trading at AMarkets, Instaforex, and Forex Club.

Trading conditions at AMarkets are quite standard. The minimum lot is 0.1, with the same step. Standard for cryptocurrencies are leverage 1:3 and a floating spread. The nice part is that there are no restrictions on placing stops close to the price.

Instaforex offers almost identical conditions. Here, keep in mind that the contract size is an order of magnitude larger: 10000 versus 1000 at AMarkets. The main difference is the presence of a fixed spread and lower margin requirements. Here it is already a matter of taste and preference, but the spread will often be lower at AMarkets. Also, stop levels cannot be placed closer than 40 points from the current price.

ForexClub has more reasonable conditions: a floating spread, 5 decimal places, and no stop level. The leverage is 1 to 10 and the standard contract size is 1000 currency units.

So, we have already found out that the unique idea at the core of the project significantly reduces the market's influence on the XRP exchange rate. It turns out that in the cryptocurrency market, Ripple is a good choice for hedging risks.

For example, if you build a correlation chart with the same Bitcoin, the result turns out to be very changeable, and it cannot be called a stable relationship in any way. Here we take into account that many altcoins try to move in harmony with Bitcoin.

Long-term investing is the simplest strategy for making money. Ripple has great prospects, so by buying on a decline, you can make good money on the next wave of growth. If you believe in Ripple's future, right now is not a bad moment to buy, as the rate is just starting to recover after a prolonged consolidation.

However, long-term investing does not mean invest and forget. To avoid long-term drawdowns and increase profitability, the position will have to be adjusted from time to time according to the changed situation. The project has an official Facebook page, where you can get up-to-date information about changes and innovations in Ripple. Also, the bitnovosti resource is suitable as a source of fundamental data, where news about what is happening in the world of cryptocurrencies is regularly published.

Once you catch a wave, you can hold the position for a long time without doing anything with it. Considering that practically each next wave has a clearly measured 61.8% Fibonacci correction, this level can be used for adding to the position along the trend.

Standard technical oscillators, such as Stochastic, RSI, perform well. Even without additional filters, the indicators give quite tradable signals, but only when it comes to large TFs. The chart shows an example of trading when RSI (period 5 bars) exits overbought/oversold zones.

Given the relative novelty of the instrument, Ripple can be traded using any traditional strategy. Levels, channels, chart patterns work well. To minimize risks, trade other altcoins alongside Ripple, ideally using one strategy. The weak correlation of exchange rates will help reduce the total drawdown.

Ripple is, on the one hand, a very promising project, possibly with a very big future. But at the moment, the currency has not yet received full recognition from either banks or ordinary users. It is also still unclear how resilient the network is to large-scale attacks, and the anti-spam protection mechanism using additional fees is clearly not an ideal solution. Nevertheless, it is already one of the largest currencies by market capitalization, and most likely growth will continue together with the rest of the cryptocurrency market.

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Best regards, Alexey Vergunov TradeLikeaPro.ru